Jessy, Jinse Finance
According to a statement released by the U.S. Securities and Exchange Commission, SEC Chairman Gary Gensler, whose term was originally set to end in June 2026, will resign on January 20, 2025.
His resignation date coincides with Trump's inauguration day. Trump promised that if he is elected, he will fire the 'crypto-unfriendly' Gary Gensler.
During the tenure of this combative chairman, the SEC tightened its attitude towards the crypto industry again, initiating a series of high-profile lawsuits against crypto companies. Gary Gensler believes that most cryptocurrencies are securities and intends to promote compliance through a series of enforcement actions. However, on the other hand, during his tenure, both Bitcoin and Ethereum spot ETFs were successively approved.
Jinse Finance sorted through his resume and governance philosophy and found that this traditional financial elite, during his tenure at the SEC, did not welcome the barbaric development of the crypto industry but was pleased to see crypto become part of traditional finance.
Claims to have a neutral attitude towards blockchain
Gensler's earliest relationship with the crypto industry probably began in 2018 when he was teaching at MIT and offered a course related to blockchain, which deeply explored the technical issues of blockchain and discussed the potential impacts this technology could have on law and investors. His course gave the impression that he held a neutral and curious attitude towards blockchain.
Later, after he became the SEC chairman, some people expected him to have a more forward-looking perspective on virtual currency issues.
However, after Gensler took office as SEC chairman, his attitude changed.
In 2022, the crypto industry fell into a low point, with a series of projects such as Luna and FTX collapsing. The SEC also initiated a massive lawsuit against the crypto industry, with the scope of the lawsuits extending from companies to individuals, such as lawsuits against celebrities like Kardashian for promoting virtual currencies online without disclosing that they were paid endorsements. More widely known are the SEC's lawsuits against several cryptocurrency exchanges, such as Binance and Coinbase, as well as against some crypto projects like Luna's parent company, Ripple, and BlockFi, among others. Regarding stablecoins and staking services, during Gary Gensler's tenure, the SEC expressed its stance: stablecoins may belong to securities and need to be registered. In 2023, the SEC charged Kraken for failing to register its staking services as securities, resulting in a $30 million fine.
The advancement of a series of lawsuits against the crypto industry is, in fact, a clarification of the SEC's regulatory intentions. According to reports from Fortune magazine, every time Gensler attends a congressional hearing, he keeps repeating one phrase regarding virtual currencies—'Come register.'
He has repeatedly pointed out in public that cryptocurrencies are 'fraught with fraud, scams, bankruptcies, and money laundering.'
Under Gensler's strong regulation, it was surprising that in 2024, the SEC successively approved Bitcoin and Ethereum spot ETFs, which undoubtedly injected a strong boost into the development of crypto.
These seemingly contradictory actions are actually underpinned by a single logic: to bring crypto under U.S. regulation.
Gensler's attitude and actions towards the crypto industry generally align with the governance philosophy of the Biden administration, where strengthening regulation is one of the main strategies.
Strong-handed traditional financial elite
Apart from the crypto industry, Gensler's other policies during his tenure at the SEC generally include: promoting reforms in financial market structure, proposing restrictions on payment order flow and other high-frequency trading behaviors to improve market fairness; advocating for strengthened disclosure requirements for companies in environmental, social, and governance (ESG) aspects to enhance market transparency; and increasing efforts to combat market manipulation and insider trading, among others.
In the face of the development of emerging technologies, he has shown a paternalistic protective instinct. This is true for the crypto industry and also applies to the AI industry, where he is concerned about the impact of financial companies using artificial intelligence and algorithms on customer behavior and is studying how to regulate this technology to protect consumers.
These policies can be simply summarized as strengthening the regulation of financial markets, protecting investor interests, especially in responding to emerging technologies and dealing with certain unexpected events.
Among these new policies, the climate change response policy is one of Gensler's most high-profile new policies, which aligns with the Biden administration's efforts to address climate change, but it has sparked strong opposition from the industrial sector, with companies claiming that the policy requirements are harsh and potentially unconstitutional.
The iron-fisted regulation of the crypto industry and the stringent energy-saving and emission reduction requirements to address climate change have faced opposition from relevant stakeholders.
The next president, Trump, had stated during his campaign that he would appoint a crypto-friendly SEC chairman and would increase domestic oil and gas production in the U.S. by relaxing restrictions on fossil fuels and loosening the permitting process for drilling on federal lands.
From the above, it can be seen that some of Gensler's policies will be abolished after Trump takes office.
For the crypto industry, during his tenure, he basically laid the foundation for the U.S. regulation of the crypto industry, with policies based on the intention to protect investors and maintain market stability. Given the rapid development of the crypto market and the accumulation of risks, these policies are necessary and urgent.
However, his regulatory approach leans more towards enforcement rather than rule-making, punishing companies without providing clarity, leading to uncertainty in the industry regarding regulatory direction. This uncertainty is detrimental to the development of an industry; for enterprises, without clear rules, they do not know what to do and what not to do, which severely constrains their development. Under such a policy direction, some crypto enterprises migrated from the U.S. to places with more comprehensive and clear crypto regulations, such as Singapore and Dubai.
A detail that can verify this point is that the SEC filed a lawsuit against Coinbase for unregistered securities, while another case was also ongoing, where Coinbase filed a lawsuit against the SEC for rulemaking. At that time, Coinbase requested the SEC to draft comprehensive rules for the cryptocurrency industry, but the SEC rejected their request. Coinbase subsequently filed a legal lawsuit, claiming that the SEC's refusal was 'arbitrary and capricious.'
Gensler has a very combative side to his character, perhaps it is this character foundation that has led to his extremely strong regulatory approach. During Obama's presidency, he served as the head of the Commodity Futures Trading Commission (CFTC), and colleagues commented that Gensler displayed great ambition and a tendency to push policies aggressively at that time. Earlier, he worked at Goldman Sachs, and at the age of thirty, he became one of the youngest partners in the firm. After leaving Goldman Sachs, Gensler entered politics, serving as the Assistant Secretary of the Treasury and Deputy Secretary of Domestic Finance, among other positions.
By sorting through Gensler's resume and governance philosophy, it is not difficult to find that he is merely making a series of policy moves under initiatives that align with U.S. national interests. Coming from a background of traditional financial elites, he has had curiosity, skepticism, and disdain for cryptographic technology, but he could not go against the development of the times.
During his tenure, he maintained a strict enforcement action against crypto without actively promoting legislation for its compliant development, which showcased his conservatism. The approval of Bitcoin and Ethereum spot ETFs was merely a situation where the water had already boiled to 98 degrees, and he just went with the flow. A deeper reason may be that representing the interests of traditional financial elites, he does not like uncontrolled crypto but is pleased to see it become part of traditional finance.
